The SBA said that “safe harbor” for PPP borrowers under $2 million “is appropriate because borrowers with loans below this threshold are generally less likely to have had access to adequate sources of liquidity in the current economic environment than borrowers that obtained larger loans.” The agency added that this “safe harbor will also promote economic certainty as PPP borrowers with more limited resources endeavor to retain and rehire employees.”
The SBA will instead focus its audit resources on larger loans — those above $2 million. The agency said that these borrowers that do not satisfy the safe harbor “may still have an adequate basis for making the required good-faith certification, based on their individual circumstances.” The agency had previously said that all PPP loans exceeding $2 million would be subject to review by SBA for compliance with program requirements.
SBA forgives the portion of PPP loans used to cover the first eight weeks of payroll costs, rent, utilities, and mortgage interest. Recipients can defer loan payments for one year. Employers have up until June 30 to rehire their recently laid-off employees and must restore and maintain salaries and hours.
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Further, detailed guidance regarding how forgiveness of the loans will work is expected soon, the SBA says.
